What Questions to Ask When Buying a Business

The day has finally come – you have bought your own business, and your dream of becoming a business owner is coming true. It’s quite an exciting endeavor, although running a small business is a big job. If this is your first foray into business ownership, it might be overwhelming trying to figure out and understand all the different aspects of the company you need to know in order to keep it afloat and bring it to success. Of course, no CEO has gotten to where they are without any mistakes (also known as learning experiences!), but when you’re first buying your business, you don’t want to make any, especially since they can be costly.

Here are some questions to ask when you’re buying an existing business.

Is this business profitable?

Nobody wants to buy a business that’s losing money, so even though this might seem like an obvious question, it needs to be reiterated. Ask about the company’s bottom line and find out what the profit margins are so you know this business is even worth putting time and money into. In order to properly gauge the company’s profitability, you should be asking questions like:

What is the reason you’re selling?

Is the physical building in good condition? Does it need any major repairs or anything urgent?

Who are your vendors? Do you have a good relationship?

How many employees do you have? What’s the turnover like?

What does your sales system look like?

Who is your target market and the demographic that supports you the most?

There are so many factors that can affect the business’s profit, so it’s best to get ahead of as many of them as you can right off the bat.

What is branding like?

Marketing is everything to a small business, especially with the rise of the Internet and social media. Find out what kind of branding the company already has. Does it have a logo, or a tagline, or a brand guideline? If it does, and the company is well known already, it might not be wise to change it right away. However, if the branding is non-existent or maybe doesn’t fit the feel of the company, you may want to give it a rebrand and refresh the image.

You can also use free tools on the Internet to see how the business is doing in terms of social branding and its overall public image. One example is the website Klout, where you can check the brand’s influence, and another is a reverse image search tool from Oberlo to see if there are any copycats or people plagiarizing the brand’s designs. It’s important to stay on top of your business’s public image, because negative PR that goes unchecked could make or break your brand, and you don’t want to start out with a disadvantage.

Is the location right?

If the business has physical locations for customers to visit or shop in, you’re going to want to make sure the foot traffic is good enough to justify the cost of owning a brick-and-mortar business. You also want to ensure your target demographic is coming to your store, and that you aren’t attracting the wrong demographic because the business is in the wrong area or neighborhood. This might require some research on your part, and you may end up deciding to move the business to better suit your customers.

Praneet is the CEO and Editor of the website TeckFly.com. He is a blogger and have varoius blog on various topic and he is from India who loves to read and write about Technology, Gadgets and Gaming. If you share the similar interests then you can follow him on Facebook | Google+ | Twitter